In a recent Business Week article about JPMorgan and Bank of America we learn that bank consolidation has led to unhappy customers. Not surprising really and tough to think of this as “news”. Clearly, pushing two behemoths together causes change. Banks know they can benefit when they leverage economies of scale and so M&A activity is an attractive option. What they seem to have missed is that these benefits should extend advantages to their customers too!
I don’t understand why bank-owners (which now largely deliver a commoditized service) think they can cut corners on customer service. I’ve written before about three controllable dimensions of service: cost, quality, and speed. In a commodity market cost and speed are equal which is why companies like Bankrate even exist. Customers see little difference between one bank and another. And because costs to switch are low consumers can choose with whom to do business. Bankrate provides the perfect answer.
In a commodity market, only service differentiates. (In this example of bad PR, the Bank of America and JPMorgan are definitely not creating positive differences.) Excellent service creates strategic advantages which:
- Protects your existing customer base,
- Generates positive word of mouth, and
- Attracts new customers.
- (Repeat as needed to develop your business.)
About the only thing that does make sense in this article is the bank’s reticence to comment publicly about the poor customer service they are delivering. What can they say? “We are improving shareholder value by short-changing our customers.”
The pivot point is that spending money on customer service should be considered an investment, not a cost. Wells Fargo’s customer satisfaction has benefited after acquiring Wachovia, a company with high customer satisfaction. Part of Wachovia’s value to their customers and to their shareholders comes precisely from their investment in a customer-focused culture.